Hestra Sustainability Report 2021/22

In Good Hands

4

Our approach to sustainability

Our commitment to make long-lasting gloves is as strong as ever.

About the report

14 15 30

In the Philippines, the classic art of glove-making is being kept alive by skilled craftswomen and craftsmen.

Hestra’s leather supplier focuses on the best raw materials and local tanneries.

A good feeling Sustainable leather A new era

Hestra’s factory in Hungary turns out between 100,000 and 120,000 pairs of sports gloves per year.

This sustainability report has been prepared in accordance with Chapter 6 of the Swedish Annual Accounts Act. The report covers the fiscal year 1 May 2021 to 30 April 2022. The previous sustainability report was published September 2021. The report covers the operations and subsidiaries of Hestra, legally known as HESTRA-Handsken AB.

The Board has ultimate responsibility for the company’s sustainability reporting process and sustainability report.

If you have any questions or comments, please contact Marie Rudenvall, Head of Quality and Sustainability, marie.rudenvall@ hestragloves.se.

We welcome your feedback on the report!

FRONT COVER CALLE FRIDOLFSSON, MALTE SVÄRM AND TILDA OLOFSSON, FISKESJÖARNA HESTRA

Hestra – a glove company with a long history

The family company Hestra was founded in 1936 and is now run by the third and fourth generation of Magnussons. The products are designed and developed at our headquarters in the small village of Hestra, Sweden, and manufactured at our own factories in Hungary, Vietnam and China. All leather, fabric, wool and other materials are sourced by our own organisation. This approach ensures a high level of quality in our products and processes and

enables us to better control the production chain. In 2021/22, we produced more than 2.2 million pairs of gloves that were sold through our subsidiaries in Sweden, the United States, Norway and Germany, as well as agents, distributors and retailers in over 40 countries.

In 2021/22, we employed a total of 652 colleagues of which 537 are women and 115 are men. We generated a turnover of SEK 569 MSEK.

Our presence

PRODUCTION

GUANGDONG, CHINA

HAI PHONG, VIETNAM

RAKAMAZ, HUNGARY

SHANGHAI, CHINA

OFFICES

DENVER, USA

HESTRA, SWEDEN

MUNICH, GERMANY

OSLO, NORWAY

STORES

COPENHAGEN, DENMARK

GOTHENBURG, SWEDEN

OSLO, NORWAY

STOCKHOLM, SWEDEN

SALES MARKETS

EUROPE

JAPAN

NORTH AMERICA

AUSTRALIA AND NEW ZEALAND

Sustainability highlights 2021/2022

60 %

IN ITS SECOND YEAR OF AMFORI BSCI-RATINGS, OUR FACTORY IN HUNGARY RECEIVED AN OVERALL A RATING – THE HIGHEST RATING AVAILABLE.

PERCENTAGE OF OUR LEATHER SOURCED FROM LEATHER WORKING GROUP CERTIFIED SUPPLIERS.

> READ MORE ON PAGE 13

INSTALLATION OF SOLAR PANELS AT ONE OF OUR FACTORIES IN CHINA.

> READ MORE ON PAGE 18

Gloves made to last!

> READ MORE ON PAGE 11

GEODIS, ONE OF HESTRAS FREIGHT PARTNERS, WAS FOR THE 7TH YEAR IN A ROW AWARDED GOLD MEDAL IN THE 2021 ECOVADIS SUSTAINABILITY RATING.

HESTRA WAS APPOINTED OFFICIAL SUPPLIER TO THE SWEDISH OLYMPIC COMMITTEE FOR THE OLYMPIC GAMES IN BEIJING 2022.

87 % 112 %

OF OUR GLOVES WERE MANUFACTURED IN FACTORIES AUDITED BY AMFORI BSCI.

HESTRA’S OWNERSHIP STAKE IN RENEWABLE ENERGY COMPANY EGEN KRAFT MORE THAN COVERS THE ELECTRICITY CONSUMPTION AT HESTRA HQ.

> READ MORE ON PAGE 18

SUCCESSFUL OPENINGS OF TWO CONCEPT STORES IN SCANDINAVIA.

> READ MORE ON PAGE 24

IN-KIND DONATIONS SENT TO AZERBAIJAN IN PARTNERSHIP WITH UNHCR.

> READ MORE ON PAGE 24

Our approach to sustainability

Hestra was founded in 1936 by Martin Magnusson, who made gloves for local lumberjacks in Hestra, Sweden. Decades later, the business is run by the fourth generation Magnussons, and the commitment to make long-lasting gloves is as strong as ever.

When Hestra was founded in the 1930s, it supported the needs of a single family in the small village of Hestra in Sweden. Today Hestra provides employment for hundreds of women and men across the world, supporting the needs of their families. In fact, the feeling of being one family remains among our colleagues, with many employees staying with the company for decades.

Our colleagues at Hestra come together to design, manufacture and sell high-quality gloves. Over generations, we have enhanced our glove-making skills, but we are still striving to refine our processes and products. It is all about finding the right balance between materials, construction, production alternatives and marketing to provide the best products to our customers.

Hestra’s success lies in our focus on the purpose of the products, ensuring the desired functionality and durability. This strength and resilience is in fact also our greatest contribution to the environment and climate, reducing the need for products that need to be replaced every season and therefore the manufacture of new materials. Our assortment of replaceable liners further extends the gloves’ lifetime, as well as their functionality.

We keep reassessing and reviewing our products, finetuning details of models that are carried over from previous seasons, as well as making small adjustments to processes to improve our operations. Many small steps add up to great

distances over time. Owning the factories where our products are made is a part of this approach. It provides us with insight into the manufacturing and enables us to identify and solve potential issues as they arise. It also allows us to instill our values of quality and sustainability in the manufacturing processes.

We make decisions that we know will benefit Hestra and our stakeholders in the longer term. The commitment builds trust with our, often longstanding, customers and suppliers. This has proven particularly important throughout the Covid pandemic and aids us in facing the challenges of the current uncertain market conditions.

Our commitment to build a solid company for future generations gives us a long-term approach to business, where we make decisions that are financially and ethically sound while honouring our brand and its legacy.

“Many small steps add up to great distances over time.”

MAGNUSSON FAMILY, JONAS, ANTON, SVANTE, NIKLAS AND CLAES, HESTRA

“Hestra’s success lies in our focus on the purpose of the products, ensuring the desired functionality and durability.”

In good hands

Our sustainability framework In good hands outlines our commitment to sustainable development throughout our value chain. When you choose a pair of Hestra gloves, you are in good hands.

DESIGN & DEVELOPMENT

Sustainability governance

Sustainability is part of the daily work at Hestra. To truly capture the opportunities and manage the risks, Hestra maintains a sustainability governance structure.

Sustainability governance is managed by Hestra’s CEO and management team that reports to the Board of Directors. Over the last few years, sustainability has been integrated into the Board of Directors’ responsibilities and is addressed at board meetings.

The appointed Head of Quality and Sustainability is responsible for operational sustainability and gathers the company’s sustainability team that comprises representatives from different departments within the organisation.

Hestra maintains ongoing dialogues with key stakeholders as part of its day-to-day operations. In 2020/21, Hestra undertook a specific project to gauge its stakeholders’ expectations on Hestra’s sustainability agenda, and conducted materiality and risk assessments, defined key performance indicators and prepared the company for sustainability reporting. In early 2022, Hestra’s sustainability agenda and reporting was analysed by students at the University of Jönköping, Sweden. Read more on page 29.

CHERISHED PARTNERSHIPS

ETHICAL BUSINESS CONDUCT

Our business relationships are built on mutual trust and an ambition to conduct business sustainably. Many of our relationships with suppliers, employees and customers have lasted for decades. Ethical business behaviour is expected from all colleagues and business partners, and our expectations are outlined in our Code of Conduct, which is based on amfori BSCI’s Code of Conduct and its 11 principles. We meet with our materials suppliers regularly to establish whether the supplier share the same values as us. This includes aspects such as chemical management and legislation, animal welfare, social aspects and ethical business conduct.

The greatest risks of unethical business conduct in the industry, including corruption, occur in the interaction with the public sector in countries with weak rule of law. Examples include management of operating permits and interactions with customs.

In 2021/22 there were no reported cases of corruption at Hestra or in our value chain.

CARINA MOLLSJÖ, DESIGNER HESTRA HQ

Design & development

To meet our high quality standards, considerable effort goes into our product design and selection of materials.

OUR APPROACH TO QUALITY AND DESIGN

Over time, our range has come to encompass everything from elegant dress gloves to tough alpine gloves and hardwearing work gloves. Design at Hestra is very much about the many small steps and details, and continuous improvements. Despite the wide range of styles, many types of gloves actually share characteristics, and designs from previous styles often inspire new styles. No matter the type of glove, the design process involves compromises where function, durability, materials, sustainability and cost are considered, with properties balanced against one another.

THE PROCESS OF DESIGNING A GLOVE

We strive to consistently meet and, if possible, exceed the expectations of our customers and partners. That is why our design process always starts from the needs of the user at hand. There are possible trade-offs that need to be considered, such as thicker materials being more durable but less supple. Often we favour leather, wool and other well-proven materials over newer supposedly high-tech materials that may not fulfil our expectations in the long run.

Careful patternmaking is one of the cornerstones in the development and what ultimately determines fit and function, and the tolerance for deviations is small when working with gloves. Each design sketch is translated into a pattern construction and later as a sample at one of our factories. The samples are assessed by the design team at our headquarters in Hestra, sometimes with assistance from our network of testers, whether professionals or colleagues in our team. That way, we can identify and address potential issues before our gloves enter production.

DESIGNING FOR QUALITY AND DURABILITY

A dedication to quality and durability is engrained in our business. With that comes a conviction that products that can be mended should be mended, rather than disposed. Our replaceable linings, which were introduced in the 1980s

by third-generation Magnusson brothers Claes and Svante, is evidence of this. At the time, fast-fashion was gaining ground and the innovation was considered replaceable. Over the years, the tables have turned and the replaceable liners have grown in prominence. Not only do they extend the lifetime of a pair of gloves, but they also add the functionality of being able to adjust the warmth by adding or removing the liner. Furthermore, the liner can be easily washed or dried by removing it from the gloves.

ASSESSMENTS OF MATERIALS

Our approach is to make small, continuous improvements to improve product quality, but also to cater to the changing needs of the consumers. We regularly integrate more sustainable materials into our products, but never at the expense of quality and durability of the gloves.

The quality and durability of a material are evaluated in field tests along with abrasion resistance testing in our inhouse laboratory’s Martindale machine. The machine simulates abrasion from wear by rubbing the material against an abrasive surface. Materials that pass the tests are often sent to accredited laboratories for further testing before they go into production.

Other factors that are considered in the materials selection process include sustainability performance, materials composition and characteristics. Sustainability performance is assessed by factors such as water consumption, chemical use and the proximity between the supplier and factory.

We introduce new materials into our range over a longer period. It is important that the qualities of the new material match the construction of the glove and its other materials. To discover and explore new and improved materials, we regularly visit trade fairs and partner with academia. One such partnership is The Swedish School of Textiles’ Corporate Challenge, where textile students were tasked to find new ways of sustainable design by looking at old Hestra gloves and materials. The results are currently included in an exhibition at the university in Borås.

Introducing a new GORE-TEX membrane

This year we introduced a new GORE TEX membrane which is durably waterproof, breathable and totally windproof. It comes with a “guaranteed to keep you dry” promise. The membrane is used in three different styles of Army leather GORE TEX. As for the sustainability performance, the membrane is designed for a long product life. It uses improved carbon footprint laminates that are PFC free as well as recycled and undyed textile components. The membrane is Bluesign approved and certified according to Standard 100 by OEKO-TEX.

Testing, testing

Not everything can be tested in a lab, which is why we also involve friends and professionals in our local communities to test our gloves in their day-to-day lives before the gloves make it to production. Over the years, we have engaged construction workers, mountain guides, athletes, children and parents, to name a few. We also test and develop our products in more severe conditions such as in expeditions where the demands are higher. The feedback on our products is important and provides insight into how the products can be improved further, often through small details.

Warranty claims with a purpose

Product warranty claims are managed by our Claims department in Hestra, Sweden. In 2021/2022, we had 0.42 percent complaints in relation to total number of gloves delivered. The most common complaints related to seams and materials. Whenever possible, we aim to repair the faulty product, and if this is not possible the product is replaced.

ISO certified

Hestra’s headquarters and our factories hold ISO 9001 certifications for their approach to quality. All sites, apart from our factory in Vietnam, also have environmental management systems certified according to ISO 14001. The Vietnamese factory initiated the certification process and a first audit for ISO 14001 was planned for end June of 2022, slightly delayed due to lockdown and pandemic.

Warranty claims provide good insight into how the products are used and show weak-spots and limitations with certain materials or constructions. Any recurrent issues are identified and when possible resolved for coming production runs, often through changes in construction or materials. Pictures of the faulty products are also shared with our suppliers to ensure the issue is addressed properly.

Share of delivered gloves that caused warranty claims

My mitten memento

There is a story in each pair of Hestra. For Stella, a frigid ski trip to the mountains with her father still comes to life in these Hestra mittens. 25 winters later.

“ Imagine what a pair of mittens can mean. Last year my father died. He was absent for the greater part of my life and left nothing when he departed. Now when it grew snowy and cold in Stockholm, I took out my old Hestra mittens. They brought me to reflect upon the one and only time my dad and I travelled to the mountains — to Idre in the mid-nineties. On the first day, we rode the ski lift to the top where the wind was howling. My hands were like ice blocks. We went straight to the shop, where he bought these mittens for me. I have NOT been

careful with them! They’ve been used for skiing, carrying wood, walking the dog and much, much more. Even so, the seam has broken in just one spot, and the leather is only slightly worn out on the left mitten. After being used every winter for the last 25 years. What incredible quality! Even if I do buy a new pair one of these days, I will always keep these in memory of my father. In 2021, we sent the gloves to Hestra for repair and lubrication. Ever since, both my kid and I use them frequently.”

“After being used every winter for the last 25 years. What incredible quality!”

IDRE, MID -90’S

Supply chain & materials

Through long-lasting relationships with our partners, we source high-quality materials with durability and sustainability in mind.

OUR SUPPLY CHAIN

Hestra works closely with a limited number of selected suppliers that can meet our standards. Many of these relationships stretch over decades and we regularly meet them on-site and at trade fairs. Our supplier base comprises around 90 suppliers, of which 15 are tanneries supplying leathers. We mainly source leather, wool and synthetic fabrics.

CODE OF CONDUCT AND POLICIES

Our Code of Conduct outlines our expectations on our business partners and suppliers. The Code is based on the amfori BSCI Code of Conduct and refers to international conventions such as the Universal Declaration of Human Rights, the Children’s Rights and Business Principles, UN Guiding Principles for Business and Human Rights, OECD Guidelines, UN Global Compact and International Labour Organisation (ILO) Conventions. All material suppliers are asked to sign the Code of Conduct. All material suppliers must also comply with our Chemical Contract, and suppliers of leather and wool also to the Animal Welfare Policy.

ANIMAL WELFARE

Leather and wool are materials particularly suited for many types of gloves. Given our reliance on leather and wool, animal welfare is important to us. All suppliers of leather and wool must sign the Animal Welfare Policy, which is based on the five freedoms of animal welfare: freedom from hunger and thirst; freedom from discomfort; freedom to express normal behaviour, freedom from disease, pain or suffering; and freedom from fear and distress. Leather and wool used are by-products from food production or with the purpose of wildlife management. The latter applies to wild animals such as elk and deer. The Animal Welfare Policy also requires that all wool is mulesing free and carries a certificate of origin.

Supplier assessments

Over the years, we have developed a systematic method for assessing new and existing suppliers. As a relatively small company in the global market, we are working with industry organisations such as amfori BSCI, The Swedish Chemicals Group and the Leather Working Group to extend our reach and improve our impact.

In addition to policies and audits, we maintain close contact with tanneries and other key suppliers in our supply chain. Through close cooperation we can ensure that they have the right knowledge about the materials characteristics, environmental management and other key issues. It also forms a basis of understanding both possible risks and areas of improvement.

New suppliers are asked to fill out the self-assessment questionnaires included in the Chemical Contract and Animal Welfare Policy.

PARTNERSHIPS FOR BETTER LEATHER SUPPLY CHAINS

We are depending on our tannery suppliers to provide us with leather to produce our gloves. We always aim to source high-quality leather with an adequate sustainability performance. In general, the leather industry is exposed to risks such as poor protection of workers’ rights and insufficient waste-water treatment. Leather tanning poses specific risks in the form of potential harm from hazardous chemicals, particularly chromium which can affect the respiratory health of workers. The chemicals found in the tanneries’ effluents can also affect local water quality, which is why we require all leather suppliers to have on-site water treatment plants.

To ensure that we avoid exposure to these risks, we maintain close contact with our suppliers. This includes onsite visits. Our partnerships with most of the tanneries go back for many years. We also review the suppliers’ certifications. The main certification for tanneries is Leather Working Group’s (LWG) audit certification, which assesses the environmental and social performance and compliance of tanneries. Its audit protocol comprises management control, environment and water, waste management and traceability. In 2020, 21 percent of the purchased leather came from suppliers that were audited by LWG, in 2021 the share increased to 60 percent.

Hestra is also a brand member of the LWG itself. LWG provides us with additional information about the leather industry and further insight into our partner tanneries through audit protocols made available by the organisation. Since we joined LWG in 2020, we have encouraged our suppliers to join too.

Keeping chemicals in check

Chemicals are required to manufacture materials and to obtain certain materials’ characteristics, but it is important that chemicals are handled with care. That is why we require our suppliers to operate in accordance with European chemical legislation REACH and local legislation.

Our Chemical Contract and Restricted Substances List (RSL) are developed by The Swedish Chemicals Group and its textile industry subgroup, of which Hestra is a member. All suppliers receive the restricted substances list twice yearly. In addition, new suppliers must sign the Chemical Contract.

In order to verify and follow up on signed chemical contracts with suppliers, materials are tested at accredited laboratories chosen by us. Depending on quantities of material ordered, we test one to three times per year. The purpose is to confirm compliance with our Restricted Substances List (RSL) in our supply chain and identify any areas, or materials, of concern as early as possible. All suppliers are regularly notified of changes in the RSL in good time to be able to make any necessary changes. In 2021/22, we identified one case in the USA (Prop 65) where the RSL had been breached. The glove model was sold in low quantities and had already been taken off the market due to other reasons. The breach was handled accordingly. We always try to address any breach together with the supplier, but if it is not taking the necessary actions or if the process takes too long, contracts are cancelled. We classify all materials used in our production based on risk and volume. Materials used in a wide range of products are tested more frequently. Depending on type of material we have different test methods that are reviewed and amended in accordance with REACH and other relevant legislation, such as the Californian Prop 65.

A good feeling

In the Philippines, the classic art of glove-making is being kept alive by skilled craftswomen and craftsmen. Here, in a well-kept factory, Hestra produces some of its timeless and fashionable glove models.

SKILLED AT WORKING WITH LEATHER

Svante Magnusson from Hestra, first visited the Philippines in 2015 to meet with possible suppliers. On that trip he also met Nick, which turned out to be the start of a great collaboration:

“Sometimes you get a good feeling: A sense of quality work and that it’s a good workplace. And that’s how it was here. They are skilled at working with leather and have a cutting technique that is similar in many respects to classic glovemaking style. Craftswomen and -men that make the most of the leather’s natural elasticity to produce gloves with a really great fit,” says Svante, who has visited the factory a number of times since.

Today, the factory produces many of the classic styles in Hestra’s line Collection.

A CAREER IN GLOVES

The company Nick manages is French-owned and was launched in 1987. Nick has been involved right from the outset, as have several of the workforce.

“We had 24 sewers when we started. Today we have around one hundred. But we have capacity for more. It’s difficult to find staff, though, as many young people choose to move abroad and work in IT, for example,” he says.

While chatting with Nick it quickly becomes clear that he cares about his staff. Ensuring they have a positive work situation is paramount. The company has signed up to Hestra’s Code of Conduct and is regularly audited by amfori BSCI. “I get regular visits from independent audit companies who check conditions here. They interview my staff, but I don’t know what’s said in these conversations and I’m not supposed to know. I respect my employees’ privacy,” says Nick.

QUALITY AND AN EYE FOR DETAIL

Every work step is documented and signed off by the individual cutter or sewer. The results are monitored at several check stations, from the leather arriving at the factory through to the finished gloves leaving the factory.

This produces first-rate gloves, in high-quality leather and with the fit and eye for detail that you would expect of fashion gloves from Hestra. Nick has every reason to be proud of the factory he is in charge of, but when asked about this, his answer is:

“It’s not important for me to be proud, but for my customers to be satisfied.”

ART. 23530 JAKE (COLLECTION)

Sustainable leather for sustainable gloves

In 2020, Hestra entered into a long-term partnership with a new German leather supplier. And since 2022, some of Hestra’s most technical styles within our Alpine Pro collection are made from the Germans’ high-quality leather developed specifically for these types of gloves. The hides come from farms in southern Germany, a region known for good animal welfare, small-scale operations, and lots of natural grazing. They are then processed at a Bavarian quality tannery located in the same geographic region.

Normen, CEO of Hestra’s new German leather supplier, learned the craft from scratch at the Reutlingen Tannery School, and in 2010 he took over the family company in Waldfeucht, Germany as CEO. The 12-strong team focuses on finding and purchasing the best leather in Europe – and they work with selected tanneries in the local area that process the leather according to their recipes and specifications.

In Hestra’s case it took around two years to develop the leather for the Alpine Pro styles, to secure the deliveries and to get the natural material into production. It needed to be hides specifically from plain brown cattle in southern Germany, and

the leather needed to have all the properties that distinguish premium ski gloves: Natural, yet strong and durable. Firm, and at the same time soft and stretchy. Effectively dyed, but without transferring colour when wet.

There were countless trips between the expert tanners in Germany and Hestra’s design and development department in Småland. Eventually, the leather had the exact desired qualities and was ready for winter activities in tough conditions.

The subcontracted tannery is one of Germany’s most modern facilities and a leader within sustainable leather production. Since the 1980s, this company based in the Bavarian town of Rehau has invested heavily in environmental technology. One initiative was building its own purification plant, which removes 99 % of the contaminants from the water used in the tanning process, and a bio power plant that produces all the energy needed for production from in-house waste products.

The tannery is ECO2L certified (Energy Controlled Leather) for its low CO 2 emissions and “Gold rated” by the industry organisation LWG (Leather Working Group). Naturally, it also fulfils the criteria of the international ISO 9001 standard for quality management systems and ISO 50001 standard for energy management systems.

Hestra’s German leather supplier focuses on the best raw materials and local tanneries with advanced environmental technology. And that can be seen and felt in the gloves.

ART. 30720 WAKAYAMA 5-FINGER

Production

Every year we produce over two million pairs of gloves, in our own factories  and with a limited network of manufacturing partners. Quality requires attention to detail and a long-term approach. We are proud to share this view throughout the company.

OUR PRODUCTION

We currently operate four factories in Hungary, Vietnam and China. Each factory has its own unique combination of skilled craftsmen and experience, which ultimately decides what styles are most suitable for each factory. Accessibility to materials and proximity to sales markets are also considered. We also have a limited network of external manufacturing partners which account for around 25 percent of our production.

The ownership in our factories provides us with increased control and the ability to influence aspects such as environmental impact, labour conditions and of course quality. As such, it reduces our risk exposure, but it also poses challenges including every colleague needing continuous work. That is why it is important for us to balance work over the year and between factories. We are also responsible for the wellbeing of our colleagues and maintaining good working conditions. Read more about Hestra as a workplace on page 27.

ASSESSING SUSTAINABILITY IN PRODUCTION

Consumers buying a pair of Hestra gloves should be safe in knowing that their gloves have been produced in a responsible manner. Our membership in amfori BSCI is an important part of our supplier assessments. The organisation aims to improve social performance in global supply chains and operates an extensive audit scheme.

In 2021/22, 83 percent of our gloves were made in factories audited by amfori BSCI. We are constantly working on increasing the share of amfori BSCI audited factories in our supply chain. All Hestra’s factories are also members of the organisation and regularly audited. In the last round of audits, our factory in Hungary went from a C rating to an A

rating. This is a remarkable result, even more so because it was the second audit ever at the factory. For the supply chain as a whole, common areas of improvement include working hours, insurance coverage and social management systems.

Some gloves and liners are made at smaller factories or studios, which may currently not have the resources to join amfori BSCI. These suppliers are still required to fulfil our supplier requirements and we encourage them to join in the longer term.

ENVIRONMENTAL STEWARDSHIP IN PRODUCTION

Environmental stewardship and compliance are prerequisites for our operations. Hestra adheres to the precautionary principle and we regularly follow up on changes in environmental legislation. In 2021/22, there was one reported case of noncompliance with environmental laws and regulation as we identified one case of breach of the Restricted Substances List (RSL) in the USA (Prop 65), described on page 13. Our headquarters and all factories but one have environmental management systems certified according to ISO 14001, and our Vietnamese factory has initiated the certification process. To read more about chemicals management, see page 13.

HESTRA Hungary Kft

Founded by Hestra in 2011

CEO: Krisztián Tenke

Location: Rakamaz, Hungary

Hestra’s share of ownership: 100%

Current BSCI-rating: A

ISO-certifications: 9001 and 14001

Number of employees: 110

HESTRA Matsuoka Vietnam

Founded by Hestra in 2018

CEO: Teruhisa Yamamoto

Location: Hai Phong, Vietnam

Hestra’s share of ownership: 100%

Current BSCI-rating: B

ISO-certification: 9001.

Number of employees: 232

Eurogant Universal Ltd.

Founded in 1993, Hestra holds a 50% stake

CEO: Chao Chung Hsi

Location: Guangdong, China

Hestra’s share of ownership: 50%

Current BSCI-rating: C

ISO-certifications: 9001 and 14001

Number of employees: 32

Zhejiang Pinghu Huashen Leather Co., Ltd

Founded in 1981, Pinghu factory became a limited liability company in 1996, got import and export rights in 1998, established a sino-foreign joint venture in 2011.

CEO: Zhang Gang

Location: Shanghai, China

Hestra’s share of ownership: 50%

Current BSCI-rating: C

ISO-certifications: 9001 and 14001

Number of employees1): 124

1) Headcount at year end

Energy and emissions

The fashion industry is known to be one of the world’s biggest emitters of greenhouse gases. The industry’s supply chains, with its materials production and transport, are key sources of these emissions. As consumers are buying and disposing of garments at a faster pace, the emissions increase. This is why our commitment to make long-lasting gloves is our greatest contribution to the environment and the mitigation of climate change.

Our own energy consumption constitutes a comparatively small part of our carbon footprint. But it is a part where we have direct influence. Every year steps are taken to reduce our energy consumption and transition to renewable energy sources which emit less greenhouse gases per kWh.

The factory in Vietnam installed solar panels in September 2021. It is our largest site and the weather conditions require air conditioning to make the work environment pleasant. In spring 2022, solar panels were also installed at one of our factories China. The solar panels are expected to be fully functional in summer 2022. The electricity consumption at

our concept stores and regional sales offices are included in the leasing fees, and our ability to switch to renewable energy sources is limited.

We are continuously assessing ways of reducing energy consumption. For example, our factories are using more energy efficient sewing machines and LED light fixtures. The heating system at our headquarters will be upgraded in the coming year.

To reduce the carbon footprint of our own transport, the company car fleet policy in Sweden was revised in 2021. All new cars must be either electric or hybrid vehicles. So far, 40 percent of the fleet has been replaced. This year, we also installed 12 electric vehicle charging points at our offices in Hestra to encourage more employees and visitors to change to an electric vehicle when they replace their car.

This year we have continued our preparations to assess our climate footprint. Our climate calculations will be included in future sustainability reports.

1) Hestra’s concept stores in Copenhagen and Gothenburg, were opened in September and October 2021, respectively. For the locations of our concept stores, please see page 1.

During 2021/22, the renewable energy produced by Hestra’s share in the windpower parks owned by Egen Kraft combined with the organisation’s purchased renewable electricity is almost equivalent to Hestra’s total electricity consumption (see table below).

RENEWABLE ELECTRICITY RENEWABLE ELECTRICITY, KWH

A contribution to the grid

Increasing access to renewable energy is one of the critical factors in achieving a low-carbon economy. More than 10 years ago, Hestra made an investment in the renewable energy company Egen Kraft. We met with Hestra’s CFO Charlotte Carlsson, who is also a Board Member of Egen Kraft, to learn more about the initiative.

WHAT IS EGEN KRAFT?

– In 2010, around 30 local companies teamed up to form a co-operative to invest in wind power. Today the entity holds stakes in three wind parks across southern Sweden, and in recent years, the co-op has facilitated the installation of solar panels at some of the partner companies’ sites.

WHAT IS HESTRA’S PART IN THIS?

– We own a 2.8 percent stake, which roughly matches the electricity consumption at Hestra HQ. I am a board member and participate in a number of board meetings every year, along with the annual general meeting of course.

HOW MUCH ENERGY DOES EGEN KRAFT GENERATE EVERY YEAR?

– It obviously changes each year depending on the weather. But in 2021, it was more than 19 GWh, equivalent to the annual consumption of almost 1,000 residential houses. The electricity generated by the wind parks is transferred to the grid and sold at market price.

WHAT ARE THE PLANS FOR THE CO-OP GOING FORWARD?

– We are extending the installation of solar panels to more partner companies, which reduces their energy costs as well as their carbon footprints. We are also looking to invest in new wind parks which will increase our contribution of renewable energy to the grid in Sweden.

EMISSIONS FROM TRANSPORT

Transport represents a significant share of greenhouse gas emissions globally, with air freight having a particularly high emissions intensity. We aim to reduce our greenhouse gas emissions from transport and put considerable effort into purchase and logistics planning. However, due to the global logistics disruptions, the pandemic and its lockdowns in 2021/22, we recorded a significant increase in the share of gloves transported by air freight rather than by sea freight during the period. The share of rail freight increased by one percentage point in the same period. Maintaining our delivery precision is vital to fulfil our obligations towards our customers and consumers, and we are grateful to our factories and long-term suppliers for maintaining their material supply and flexibility throughout these trying times. We remain committed to reduce our emissions from transport over time and increase the share of rail freight in the coming years.

“Our policy aims to control and reduce the environmental impact of our activities and contribute to the fight against climate change. This is based on reducing our carbon footprint and pollutant emissions, in addition to optimising the use of resources” says Cécile Bray, CSR Director, GEODIS, Hestra’s air freight partner. In collaboration with its customers, GEODIS is developing solutions with a lower carbon footprint via the optimization of transport plans, the implementation of multimodal solutions and the use of clean-energy vehicles.

BY TYPE

Sales

HESTRA’S SALES ORGANISATION

Our sales organisation is tailored to suit to the conditions of each market. In Sweden, Norway, Germany and the US, Hestra operates local sales organisations with our own staff. We also have concept stores in Stockholm (Sweden), Oslo (Norway), Gothenburg (Sweden) and Copenhagen (Denmark). The latter two opened in 2021. In other regions, such as Denmark, Benelux and Austria, we have close cooperation with commissioned agents, that market and sell our products in their respective areas. Elsewhere, we work with distributors that represent Hestra in their markets through their operations. Our collection of gloves for professional use, Hestra Job, is currently only available in Sweden and the US and is sold and marketed through our own sales organisation. We work closely with current and prospective customers – no matter if they are a big-box retailer, a large e-commerce player or a specialist shop.

CAPTURING THE GROWTH ONLINE SUSTAINABLY

E-commerce is still gaining ground quickly in our industry. The behavioural patterns that were adapted during the pandemic: increased shares of e-commerce purchases, and a strong outdoor trend, seem to be here to stay. We see a great potential in growing our presence online, through our own e-commerce and through our partners. Benefits include a greater range of models, sizes and colours that more easily meets customers’ expectations. For the retailer, e-commerce often has a smaller cost base than a physical store, but e-commerce also poses challenges in the form of fewer opportunities to guide and interact with the customer. This is why we have taken care to incorporate glove-maintenance guides, materials information and links to suitable accessories via our website and also make this available to our partners. Online consumers expect more transparency about the supply chain and factories, as well as the origin of materials, which is something we are currently working on

improving. We want the customer to be able to make a sustainable choice with their purchase. The transport and logistics of e-commerce, particularly returns, also need to be efficiently managed to reduce transport-related greenhouse gas emissions. We currently charge customers for product returns, as we believe it is the better long-term approach.

Hestra’s new e-commerce website was opened in spring 2021 and has seen strong growth during the year. Later in 2022, we intend to launch a new website for Hestra Job, comprising a digital showroom for the European market and an e-commerce website for the American market.

IN THE HANDS OF OUR CUSTOMERS

Our consumers represent a wide range of ages and sizes, but they all appreciate our quality and well-fitted gloves. Guiding the consumer to the right glove for the right activity is one of the most important tasks for our sales staff and resellers. Consumers’ perceptions of Hestra and our products’ quality heavily relies on this. Given the expected lifespan of our products, we encourage our consumers to not buy and replace their gloves too often. Instead we aim to sell replaceable liners, and gloves for new activities, to existing consumers.

As well as ensure high quality, the design department is responsible for ensuring the product safety of our gloves. A particular risk for childrens’ gloves is to eliminate any details that can lead to accidents, for example details that can cause choking or risk getting caught during its usage and cause dangerous situations. Another risk pertaining to all our gloves is the use of chemicals in the production process, which risks causing harm to the people producing or wearing the gloves. Our extensive chemicals testing process is described on page 13.

To manage the health and safety impacts of all products, particularly children’s gloves, we employ a health and safety risk assessment tool, which is managed by the design department.

The shopping experience is the start of our consumer’s life with their new pair of Hestra gloves, we want to make it as inspiring and informative as possible.

Replaceable liners

One of the most important sustainability efforts at Hestra is to thoughtfully design products that last. Replaceable liners extend the life of gloves, and many of our outer shell gloves can also be worn on their own. Replaceable liners enable customers to adapt their glove to multiple activities, and can be washed and easily repaired. This extends the life of the outer shell glove too.

34.9 %

Lighter packaging

SHARE OF REPLACEABLE LINERS IN THE RANGE

Digital guides to make gloves last longer

Packaging materials are needed to protect their contents from damage from light, heat and humidity during transport and storage. Previously, every pair of gloves has been packed in regular PE plastic polybags. Shifting in December 2022 all gloves will be packaged in recycled, recyclable LDPE plastic polybags. The new bags are low density, thinner polybags, saving about 27 percent plastic. In a year’s consumption, it reduces the plastic use by 1.4 tons, which results in lower greenhouse gas emissions. Cartons with produced gloves from factories shipped to Sweden are being reused for as long as possible.

At our website hestragloves.com you can find guides on how to stay warm, how to take care of your gloves and how to wash and dry your gloves, along with a fitting and size guide.

Gloves for every need

Sport

The Hestra Sport collection includes hundreds of glove models. While that may sound like a lot, decades of experience have taught us that every hand, day and activity is different. This collection is designed in col laboration with freeriders, mountain guides, instructors and others who place the highest demands on their gloves.

Professional

In 1936, Hestra founder Martin Magnusson sourced local wool, leather and rivets to construct gloves to help the area’s lumberjacks work through the harsh Scandinavian winters. The guiding principles of quality material, thoughtful construction and user-centric design remain our primary focus today. In our workglove line you will find gloves for military, gardening, construction and other uses. It is a range of gloves with an emphasis on dexterity, protection and features built for the task at hand.

Dress

In our world, even 0.1 millimetre makes a difference. For four generations we have been solely devoted to one thing: preserving and practising the rare art of glove making by crafting the world’s finest gloves from carefully selected materials. Inspired by our natural surroundings, our master certified glove cutters use the finest leathers and materials to craft style-forward gloves that balance warmth, dexterity and style.

Long-life design

Our home region Småland is known for its prudent mindset. Here you take good care of your things, enjoy saving resources and thoroughly consider the real benefits of buying something new. Much of this approach can be found in Hestra’s product and design philosophy: We make gloves that last. A pair of Hestra can be used for many years. And even the design itself – from forms, colours, functions and the choice of material to the way a model is constructed and produced – is intended to have a long life.

80 percent of the range is carried over to each new season, often no more than 2–3 new colours are introduced each year. This brings many benefits – stability for our suppliers, more manageable production, reduced waste, gradual quality improvements, and less need for our retailers to clear out and replace their stock every season. New designs are only introduced after careful, comprehensive testing and as a common-sense decision of different departments. And when

it comes to new materials, we examine quality and durability in our in-house laboratory and assess the sustainability performance using factors like water consumption, chemical use and the proximity between the supplier and factory.

To prolong the product lifetime, Hestra introduces more and more models with detachable liners that makes it easy to replace just the inside when needed. At the same time we help the customer to take care of the outside. Video tutorials show how to clean and impregnate leather and functional materials or how to fix small damages. Beyond that, a professional repair service has been built up, not least for work gloves that are especially exposed to abrasion.

Together with the Swedish School of Textiles in Borås, Hestra’s design department is developing strategies for a circular future and studying how materials can be reused. Even possibilities for secondhand activities are being examined, focusing on kids gloves in the first phase.

ANNETTE LIDÉN, WAREHOUSE/REPAIRS, HESTRA HQ

Warming donations

Hestra has a long-standing tradition of donating gloves to those in need. Since 2020, we have partnered up with Sweden for UNHCR to donate children’s gloves to refugee children.

“Hestra contacted us and asked if we were interested in 10,000 pairs of children’s gloves. During the winter season, there is always a desperate need for warm clothes and we can only dream of purchasing quality gloves like Hestra’s when we purchase goods ourselves. Of course, we happily accepted the donation!”, says Amelie Häger, Senior Strategic Partnerships Manager at Sweden for UNHCR.

The donated gloves were matched with refugees with urgent needs, identified by UNHCR, and were distributed in schools in the Barda region of Azerbaijan with the help of a local partner organisation. The distribution was monitored by UNHCR. The donation was followed up with another donation of 5,000 pairs of children’s gloves in winter 2021, and was coupled with a “Buy one, give one’ consumer campaign. “Having a pair of gloves that actually warms the hands really makes a big difference to these children,” concludes Amelie.

In spring 2021, Hestra also donated SEK 100,000 towards UNHCR’s efforts to help refugees from Ukraine. These donations are just the start of a hopefully long and mutually beneficial partnership.

About Sweden for UNHCR

Sweden for UNHCR is a national registered charity, raising funds for the benefit of UNHCR’s operations globally. UNHCR, the UN Refugee Agency, is saving lives, protecting rights and building a better future for refugees, forcibly displaced communities and stateless people across more than 130 countries in the world.

Hestra’s concept stores

In 2021, we opened two new concept stores – in Gothenburg, Sweden where we have a strong customer base, and in the fashion capital Copenhagen, Denmark. Our concept stores give us the opportunity to showcase our products and wide assortment, but also a chance to interact face-to-face with our customers and offer our expertise in gloves. Hestra concept stores are in fact glove know ledge centres, where customers can enjoy our expertise in selecting the right glove for the right purpose, be assisted in picking the right liners and access repair service on-site if necessary. Concept stores are also an inspiration to our retailer customers how to display our gloves and conduct a successful glove business. The interior of the new stores has been designed to inspire. We partnered up with PS Retail, a local interior design company, to get the right outdoor vibe, simple and down-to-earth, just like Hestra. We strongly believe in our concept and that we can fill a knowledge gap in the market with our glove know-how.

SCHOOL CHILDREN AZERBADJAN

ANDREAS HÅKANSSON GLOBAL SALES MANAGER, NIKLAS MAGNUSSON, CERTIFIED GLOVEMAKER & RETAIL MANAGER AT OPENING HESTRA CONCEPT STORE, GOTHENBURG OCT 2021

Gloves fit for winners

Participating in the Olympics is one of the greatest experiences for many athletes. Meticulous planning goes into the athletes’ preparations, and the same goes for their clothes. The Swedish Olympic Committee is responsible for the outfits worn at the opening, medals and closing ceremonies.

For the 2022 Winter Olympic Games and Paralympic Games in Beijing, China, Hestra was appointed as one the official suppliers by the Swedish Olympic Committee, together with Japanese retailer Uniqlo and Swedish outdoor and shoe manufacturer Tretorn. The collection was developed in partnership with the athletes, Uniqlo, Tretorn and the committee, to fulfill the International Olympic Committee’s strict requirements.

Hestra developed two models for the Swedish Olympic team, a warmer three-finger glove and a liner which can be used together or individually.

– Focusing on sustainability, we chose to keep the number of models down and develop models that would be warm both in Beijing and in the colder parts of the mountains. The three-finger glove is also made with a replaceable liner as we hope that the gloves will be used even after the Olympics, explains Marianne Knutsson-Hall, Chief Designer at Hestra.

A total of 670 pairs of gloves were manufactured at Hestra’s factory Eurogant in China. The surplus gloves were distributed among the athletes at the Youth Olympic Games.

“Hestra’s gloves exceeded all expectations and we were delighted to be able to have Swedish partners for our 2022 Winter Olympic clothes collection.”

– Marja von Stedingk, Project Manager at the Swedish Olympic Committee.

LINER MADE FOR THE 2022 WINTER OLYMPICS GAMES AND PARALYMPIC GAMES IN BEIJING, MADE IN HESTRAS OWN FACTORY EUROGANT, CHINA

HESTRA GLOVES LLC, ARVADA USA

TOTH M. ANDREA, SEEMSTRESS HESTRA HUNGARY

NIKLAS MAGNUSSON, CERTIFIED GLOVEMAKER

TERUHISA (TERRY) YAMAMOTO AND HIS TEAM, HESTRA MATSOUKA VIETNAM

Colleagues

As a fourth-generation family company we foster our culture of entrepreneurship. We are currently more than 600 colleagues in Sweden,  Norway, Denmark, Hungary, China, Vietnam, USA and Germany.

HESTRA AS A WORKPLACE

Hestra’s continued success depends on our ability to retain and recruit talented colleagues with the right competencies. Our strong brand and corporate culture, that foster responsibility and commitment, are important parts in achieving this. In our recruitment processes, we are looking for eager, committed and competent individuals with a passion for our products. We know that these individuals will give us the best chance to strengthen the company with their expertise and enthusiasm.

Our business has seasonal variations, with a big share of sales in the winter period. The changing demands of production in the factories constitute a risk for our employees, as it can lead to extended overtime during certain periods of the year. To successfully meet demand, it is important that we plan our operations in the best way possible to avoid unnecessary peaks and prolonged periods of overtime. However, colleagues at our factories are sometimes given extended annual leave with 80 percent salary when production levels are low. At our headquarters we hire employees on shortterm contracts to our warehouse and customer service in the busy winter season.

Diversity remains a challenge in the apparel industry, and it is an issue we are looking to address. Traditionally, most of the seamstresses in the countries in which our factories are located, are female. A risk for our seamstresses is the ability to maintain a manageable workload that can be combined with other responsibilities. During the pandemic this proved to be particularly challenging, as some colleagues with children had to refrain from working and home-school their children as their countries were in lockdown and schools were closed.

At our headquarters and in the sales organisation, the gender balance is more even. Balanced teams, in which competencies and personalities complement each other, provide

benefits for the teams as well as the company. Gender pay gaps are reviewed yearly and salaries are also benchmarked against industry peers.

CONTINUOUS COMPETENCE DEVELOPMENT

We want to foster an entrepreneurial and proactive culture that gives the company and the individual chances to grow and take responsibility. Hestra’s employees are encouraged to learn and take on a variety of tasks and responsibilities. Even if it might be time-consuming at first, it makes us more resilient in the long run. Our colleagues also appreciate that they can expand their skills and gain insight into other parts of the business.

Hestra’s employees are offered yearly performance reviews with their manager. The purpose of these reviews is to plan and manage the employees’ work and development. In these reviews, we also set individual targets that are aligned with our business objectives. The reviews encourage mutual feedback and give the employees the opportunity to influence their own and the company’s development. The reviews also help us mitigate the risk of our employees obtaining the right skill level and development goals to ensure they are satisfied in their roles at Hestra.

This year the competence development has been focused on sustainable leadership. A series of workshops were conducted during autumn 2021 and will be followed up in spring 2022. Sustainable leadership is about leading yourself and giving the employees the tools to drive the business in the right direction and towards the company´s visions and goals, which is eventually reflected in the company’s results. As well as improving our gloves with small measures for long-lasting wear, Hestra likes to foster leaders who are in it for the long run, because in the end, it is all about tradition and longlasting relations.

Building lasting relationships

As a family business, Hestra sets a high value on the relationship with its employees. One important factor here are the local managers. Knowing the language and the cultural codes of the specific country, they serve as a link between staff and company. “I spend a great deal of my working time on the factory floor to keep a close contact with the people – listening, explaining, and helping to solve day-to-day problems”, says Krisztián Tenke, managing director for Hestra Hungary. “We have so many smart and keen individuals in production. It’s essential to keep a positive relationship –to interact on the same level.”

In all countries, the Hestra factories have established their own routines to keep up a feeling of belonging amongst the staff: Hestra Matsuka Vietnam for example organises annual trips including accommodation and team-building activities for the whole staff. Chinese Hestra Pinghu, meanwhile, has inherited and developed welfare policies from the past that even include care for retired employees and sick family members or support for children’s education. “In 2021, we disbursed education allowance to 22 students and amongst others subsidised the family of a colleague whose husband became seriously ill”, reports Kathy Sun, deputy Managing Director at Hestra Pinghu.

“Many of our employees have worked with our gloves for decades and there is a strong sense of loyalty and identification among the entire staff”, says Anton Magnusson.

Learning on the job

All factories develop yearly training plans to offer employees the chance to increase their competencies at work. In addition to onboarding training for new colleagues, the staff at our factories undertake training throughout the year. In 2021/22, focus areas have included occupational health and safety, labour law and reviews of ISO and amfori BSCI requirements. Employees are also offered training based on their roles’ requirements. This includes tailored training for occupational health and safety managers, and lessons on English and environmental compliance.

“This ultimately contributes to Hestra’s reputation as a good employer at all our four production locations, which in turn helps us to continue to attract talented people in the future. The best proof that Hestra’s long-term investment as a workplace pays off.”

2 DAY TRIP TO HA LONG BAY FOR HESTRA MATSOUKA VIETNAM EMPLOYEES

HESTRA HUNGARY WAREHOUSE

What effects does sustainability reporting have on a company’s culture? Fair pay

Learning to make gloves is a long process which requires skilled seamstresses. To recruit and retain our highly qualified colleagues, we provide a competitive salary and benefits. At our factories, entry-level salaries exceed, or are in line with, local living wages. Benefits include social insurance schemes, performance bonuses, lunches, family days and excursions. In the category Fair Remuneration of amfori BSCI’s audits, all of our factories have received A grades.

In spring 2022, three undergraduate students from University of Jönköping, Sweden, who studied “Sustainability Enterprise Development” elected to study Hestra in their bachelor’s thesis. We were curious to find out how our first Sustainability report from 2021 was received by colleagues. Some of the key findings were: the term “sustainability” is rarely used at Hestra, but the employees were unanimous in saying that Hestra is a brand whose core value has always been, and will always be, quality without exceptions. Products should last not only the customer for a long time, but preferably for generations. Another core value is the strong sense of tradition and family values which are also engrained in our employees. This perception is shared by management and we will incorporate the study’s findings into Hestra’s ongoing sustainability journey.

Men 82 %

Women

BERECZ (ERIKA) ZSOLTNÉ, SEEMSTRESS HESTRA HUNGARY

ANTON MAGNUSSON, CERTIFIED GLOVEMAKER AND CEO, OPENING HESTRA CONCEPT STORE, GBG OCT 2021

New era for Hungarian glove-making tradition

Production of leather gloves had died out in large parts of Europe by the second half of the 20th century. In Hungary, however, this craft has survived. Hestra has been working with Hungarian glove-makers since the 1950s, and ten years ago decided to build our own factory here. In the little town of Rakamaz, Tokaj, we have built Europe’s most modern glove-making factory. This light and spacious facility is now ushering in a new era in Hungarian glove-making. There are significant benefits of establishing the factory within the European Union.

“No customs duties, many common laws and regulations and stable working conditions,” explains Anton Magnusson, Managing Director of Hestra, before continuing: “Transport routes are also relatively short, which is good from a sustainability, cost and planning perspective.”

BUILDING UP KNOWLEDGE

Anton Magnusson served as Managing Director of the Hungarian subsidiary for two years, and now believes that Hestra has not only built a factory, it also built up a great deal of knowledge. Together with experts from the Swedish School of Textiles, for example, a training programme has been developed whereby skilled glove-makers work in the same team as less experienced colleagues, teaching them practical skills.

“The tradition of craftsmanship that my grandfather was familiar with here fifty to sixty years ago, whereby knowledge was passed down through generations of a family, no longer exists in Hungary today. This transfer of knowledge now has to take place within the company,” says Anton Magnusson. Such individual training takes time, but Anton Magnusson is confident that the investment is worthwhile. “It not only results in greater knowledge and know-how within the company, but also a sense of identity and responsibility. Like in a big family.”

QUALITY APPRECIATION

The facility in Rakamaz turns out between 100,000 and 120,000 pairs of sports gloves per year – and every pair must maintain the highest of standards. Since 2015, the company has held certification under the global ISO 9001 and ISO 14001 standards, covering quality and the environment. “Each employee and each work team, regardless of the phase of the manufacturing process, bears responsibility for the quality of their work,” explains Krisztián.

Hestra Hungary also holds an A-rating from its most recent amfori BSCI audit. As Krisztián puts it:

“This should be an attractive and safe workplace with humane working hours, fair pay and the highest level of safety.”

GYURICZA

(VALIKA) BARNÁNÉ, SEEMSTRESS HESTRA HUNGARY

Stakeholder dialogue & materiality assessment

We are proud of our sustainability efforts and the way that we conduct our business. But we also know that we have a long way to go and that we must stay focused to really drive the change that we want to see. By engaging our stakeholders in dialogue and publishing a sustainability report annually, we aim to be more transparent and share our journey with you.

In 2020, we took the first steps on our reporting journey by carrying out a structured stakeholder dialogue and materiality assessment. These were performed using the methodology prescribed by the internationally recognised sustainability framework Global Reporting Initiative Standards. The process was facilitated by external sustainability advisers.

STAKEHOLDER DIALOGUE

Hestra maintains a daily dialogue with key stakeholders such as customers, colleagues and suppliers. For the purpose of this report and to further develop our sustainability agenda, we engaged a selection of representatives from our key stakeholder groups in a structured dialogue in 2020. These stakeholder groups represented customers, suppliers, subject-matter experts, colleagues and owners. The stakeholders were selected based on their impact and the expectations they have of Hestra, as well as their dependency on Hestra in the longer-term.

The stakeholders were asked to rank topics from a comprehensive list of sustainability topics that potentially could be relevant to Hestra. The basis for the list was SASB Materiality Map for Apparel, Accessories & Footwear industries, and GRI Sustainability Topics for Sectors for Textiles, Appa rel, Footwear Industries and Luxury Goods and Retailing Industries. Peers’ reporting and sustainability agendas were also considered.

MATERIALITY ASSESSMENT

Hestra’s economic, environmental and social impacts were assessed through a workshop with representatives from Hestra’s Group Management and selected colleagues from key departments. In addition to assessing the company’s impacts, the participants also discussed where in the value chain these impacts occur. Hestra’s material topics are:

Anti-corruption

• More sustainable materials

Animal welfare

Water and chemicals

Energy

• Emissions

Environmental compliance incl. REACH

Attractive workplace

Training and education

• Supplier assessment

Product safety

Product quality

We intend to extend the scope of our sustainability report and include more key performance indicators over time.

Auditor’s report on the statutory sustainability report

To the general meeting of the shareholders in HESTRAHandsken AB, corporate identity number 556633-9668

ENGAGEMENT AND RESPONSIBILITY

It is the board of directors who is responsible for the statutory sustainability report for the financial year 1 May 2021–30 April 2022 and that it has been prepared in accordance with the Annual Accounts Act.

THE SCOPE OF THE AUDIT

Our examination has been conducted in accordance with FAR’s auditing standard RevR12 The auditor’s opinion regarding the statutory report. This means that our examination of the statutory sustainability report is substantially different and less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion.

OPINION

A statutory sustainability report has been prepared.

Jönköping, 29 September 2022

Öhrlings PricewaterhouseCoopers AB

Daniel J. Lützen

Authorized Public Accountant

PHOTOGRAPHERS:

Kent Malm, Azan Volunteers/UNHCR and others.

LINN KRAGERUD, OLLE MAGNUSSON, CALLE FRIDOLFSSON, ETTÖ NATURRESERVAT/HESTRA